BackSAT rejects intervention petition in RIL insider trading case
Petitioner directed to separately approach the high court or Supreme Court
Premium(Mint)
Mumbai: The Securities Appellate Tribunal (SAT) on Wednesday rejected a so-called intervention petition filed in a case related to alleged insider trading by Reliance Industries Ltd (RIL).
Petitioner M. Furquan claimed that there could be possible collusion between the capital market regulator Securities and Exchange Board of India (Sebi) and RIL to settle the matter.
An intervention petition is filed by an outsider seeking to be made a party to a case that’s being heard by a legal forum.
The tribunal, however, did not entertain the petition and directed him to separately approach the high court or Supreme Court. It dealt with the petition while hearing an appeal filed by RIL against Sebi in the insider trading case.
SAT, which hears and disposes of appeals against the capital market regulator, will now hear the case on 11 October.
The tribunal had earlier asked Sebi to produce its file on the case and the notings of the committee that decided to withdraw it from the consent mechanism, under which companies and individuals can seek to settle cases after the payment of certain charges, without admission or denial of any wrongdoing.
RIL had challenged a show cause notice issued by Sebi in December 2010 in the case on the grounds that it hadn’t been given adequate access to the documents on which the notice had been based. It also challenged the regulator taking the case out of the consent process.
RIL also challenged changes made by Sebi in norms governing settlement of cases through the consent mechanism, especially cases that are already under consideration.
In May 2012, Sebi tightened the norms for settlement through the consent framework. As a result, many cases, including those related to insider trading, are not being settled through this mechanism.
On 3 January, Sebi published a list of 149 consent pleas, including 16 from entities related to the RIL group, which it had found unsuitable for settlement through the consent process. These include applications of RIL and of RIL chairman Mukesh Ambani’s close aide Manoj Modi.
RIL sold a 4.1% stake in Reliance Petroleum in 2007. In order to prevent a slump in the stock, the shares were sold first in the futures market and later in the spot market, covering the share sales in the futures market.
Sebi says that as the company was aware of the sale of equity shares and sold futures ahead of the sale, its actions amounted to insider trading.
RIL got Rs.4,023 crore from the trades; its profit from the transaction in the futures segment was Rs.513 crore.
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